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2007-10-02 CITY OF SOUTHLAKE OFFICIAL RECORD REGULAR CITY COUNCIL MEETING MINUTES: OCTOBER 2, 2007 LOCATION: 1400 Main Street, Southlake, Texas Council Chambers in Town Hall CITY COUNCIL PRESENT: Mayor Andy Wambsganss, Mayor Pro Tern Carolyn Morris, Deputy Mayor Pro Tern Virginia M. Muzyka, and Councilmembers Laura K. Hill, Gregory Jones and John Terrell. CITY COUNCIL ABSENT: Councilmember Vernon Stansell. STAFF PRESENT: City Manager Shana Yelverton, Assistant City Manager / Director of Public Safety Jim Blagg, Assistant City Manager Ben Thatcher, Manager of Information Services Gary Gregg, Director of Community Services Steve Polasek, Deputy Director of Community Services Kerry McGeath, Director of Economic Development Greg Last, Economic Development Specialist Stefanie Wagoner, Director of Finance Sharen Jackson, Chief of Fire Services Robert Finn, Chief of Police Services Wade Goolsby, Director of Human Resources Kevin Hugman, Director of Planning and Development Services Ken Baker, Chief Planner Dennis Killough, Deputy Director of Public Works Gordon Mayer, Public Works Operations Manager Chuck Kendrick, City Attorney Tim Sralla, and City Secretary Lori Payne. WORK SESSION: Agenda Item No. 1. Call to order. The work session was called to order by Mayor Wambsganss at 5:06 p.m. in Training Rooms 3C and 3D. Agenda Item No. 2. Invocation. Chaplain of the Month Rolla Goodyear gave the invocation. Agenda Item No. 3A. Ordinance No. 480-RRR, Amending the Comprehensive Zoning Ordinance No. 480, as amended, as it pertains to oil and gas drilling and production; Agenda Item No. 3B. Amendment to the City's Master Comprehensive Plan as it pertains to oil and gas drilling production, oil and gas production pad sites and natural resource extraction activities; and, Agenda Item No. 3C. Ordinance No. 880-A, Amending Section 9.5, Article IV of the Southlake City Code regarding oil and gas well drilling and production. Director Baker made a formal presentation. After Director Baker finished, the Council discussed these items. Council reviewed the draft plans and discussed possible suggested changes. Agenda Item No. 3. Discuss all items on tonight's meeting agenda. City Council reviewed the consent agenda items with city staff. The work session ended at 6:31 p.m. REGULAR SESSION: REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page I of 13 Agenda Item No. 1. Call to order. The regular session was called to order by Mayor Wambsganss at 6:31 p.m. Agenda Item No. 2A. Executive Session. Mayor Wambsganss announced City Council would be going into Executive Session pursuant to the Texas Government Code Section 551.071, consultation with the city attorney, and Section 551.087, deliberation regarding economic development negotiations. City Council adjourned for Executive Session at 6:31 p.m. Executive Session began at 6:50 p.m. and ended at 7:43 p.m. Agenda Item No. 2B. Reconvene. Mayor Wambsganss reconvened the regular meeting at 7:51 p.m. in the Council Chambers and asked if any action was necessary from Executive Session. No action was necessary. Agenda Item No. 3A. Mayor's Report. No report was given. Agenda Item No. 3131. Oktoberfest Announcement - Jami McKenney Southlake Chamber of Commerce. Ms. McKenney presented information on the event taking place this weekend. Agenda Item No. 3C. School District Report. No report was given. CONSENT AGENDA: Consent agenda items are considered to be routine by the City Council and are enacted with one motion. Agenda Item No. 4A. Approve the minutes from the September 18, 2007, regular City Council meeting. No presentation was given. Agenda Item No. 413. Authorize the purchase and installation of a Motorola 600 Series 5 4GHz point to point data radio from Motorola Inc through the Houston-Galveston Area Council of Governments in the amount of $65,925. No presentation was given. Agenda Item No. 4C. Authorize the purchase of a Vac-Con Hydroexcavator from Vac-Con Inc and Santex Truck Center through the Houston-Galveston Area Council of Governments in the amount of $259,988. No presentation was given. Agenda Item No. 4D. Ordinance No. 918, l" Reading Adopt an ordinance to dedicate a water line easement on City-owned property at Continental Boulevard for purpose of constructing public improvements. No presentation was given. Agenda Item No. 4E. Resolution No. 07-048 Approve the 2007 City of Southlake Sidewalk Plan, an element of the City of Southlake Comprehensive Master Plan the Southlake 2025 Plan This item was tabled to the October 16, 2007, City Council meeting. Agenda Item No. 4F. Ordinance No. 480-LLL 2nd Reading Amending the Comprehensive Zoning Ordinance No. 480, as amended as it pertains to the creation of the SF-2 Single Family Residential Zoning District. This item was tabled to the October 16, 2007, City Council meeting. REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 2 of 13 Motion was made to approve consent agenda items 4A; 413; 4C; 41); to table 4E to the October 16, 2007, City Council meeting; and to table 4F to the October 16, 2007, City Council meeting. Motion: Morris Second: Terrell Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 REGULAR AGENDA: Agenda Item No. 5. Public Forum No one spoke. Agenda Item No. 6A. Ordinance No 635-132°d Reading Amending Chapter 2 Article VI Code of Ethics and Conduct of the Southlake City Code to comply with provisions of Chanter 176 of the Texas Local Government Code as amended by HB 1491 Mayor Wambsganss introduced this item. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS, AMENDING CHAPTER 2, ARTICLE VI, CODE OF ETHICS AND CONDUCT OF THE CODE OF ORDINANCES OF THE CITY OF SOUTHLAKE, TO AMEND SECTION 2-265 DISCLOSURE OF INTEREST TO COMPLY WITH CHAPTER 176 OF THE TEXAS LOCAL GOVERNMENT CODE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR PUBLICATION AS REQUIRED BY LAW; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 635-13, 2°d Reading, Amending Chapter 2, Article VI, Code of Ethics and Conduct of the Southlake City Code to comply with provisions of Chapter 176 of the Texas Local Government Code as amended by HB 1491. Motion: Jones Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6B. Ordinance No 699-A 2nd Reading Repealing Ordinance No 699 and amending the regulations regarding Cross Connection Control Mayor Wambsganss introduced this item. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE REPEALING ORDINANCE NO. 699 AND ADDING CHAPTER 19, ARTICLE VI TO THE CODE OF ORDINANCES; PROVIDING FOR THE REGULATION OF CROSS CONNECTIONS AS DEFINED BY THE STATE REGULATORY AGENCY; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 3 of 13 ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN PAMPHLET FORM; PROVIDING FOR PUBLICATION IN THE MANNER AUTHORIZED BY LAW; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 699-A, 2"a Reading, Repealing Ordinance No. 699 and amending the regulations regarding Cross Connection Control. Motion: Jones Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6C. Ordinance No 914, 2nd Reading Adopting regulations regarding the generation, transportation and disposal of liquid waste in the City of Southlake Mayor Wambsganss introduced this item. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE ADDING CHAPTER 19, ARTICLE V, TO THE CITY OF SOUTHLAKE CODE OF ORDINANCES ADOPTING REGULATIONS REGARDING THE GENERATION, TRANSPORTATION AND DISPOSAL OF LIQUID WASTE IN THE CITY OF SOUTHLAKE CODE OF ORDINANCES ADOPTING REGULATIONS REGARDING THE GENERATION, TRANSPORTATION, AND DISPOSAL OF LIQUID WASTE IN THE CITY OF SOUTHLAKE, TEXAS; PROVIDING FOR PUNISHMENT FOR VIOLATION; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; SETTING THE PERMIT FEE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN PAMPHLET FORM; PROVIDING FOR PUBLICATION IN THE MANNER AUTHORIZED BY LAW; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 914, 2"d Reading, Adopting regulations regarding the generation, transportation and disposal of liquid waste in the City of Southlake. Motion: Jones Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6D. Ordinance No 917, Consider all matters incident and related to the issuance and sale of "City of Southlake Texas Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation Series 2007," including the adoption of an ordinance REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 4 of 13 authorizing the issuance of such certificates of obligation Mayor Wambsganss introduced this item. Maria Orbeno of First Southwest Company presented this item to Council. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE AUTHORIZING THE ISSUANCE OF "CITY OF SOUTHLAKE, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007"; SPECIFYING THE TERMS AND FEATURES OF SAID CERTIFICATES; PROVIDING FOR THE PAYMENT OF SAID CERTIFICATES OF OBLIGATION BY THE LEVY OF AN AD VALOREM TAX UPON ALL TAXABLE PROPERTY WITHIN THE CITY AND A LIMITED PLEDGE OF THE NET REVENUES FROM THE OPERATION OF THE CITY'S WATERWORKS AND SEWER SYSTEM; AND RESOLVING OTHER MATTERS INCIDENT AND RELATING TO THE ISSUANCE, PAYMENT, SECURITY, SALE AND DELIVERY OF SAID CERTIFICATES, INCLUDING THE APPROVAL AND EXECUTION OF A PAYING AGENT/REGISTRAR AGREEMENT AND A PURCHASE AGREEMENT AND THE APPROVAL AND DISTRIBUTION OF AN OFFICIAL STATEMENT; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 917, Consider all matters incident and related to the issuance and sale of "City of Southlake, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2007," including the adoption of an ordinance authorizing the issuance of such certificates of obligation. Motion: Jones Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6E. Resolution No. 07-057 CP07-003 Comprehensive Land Use Plan Amendment for South Village at Watermere being approximately 33.72 acres located at 2271 Union Church Road. The current underlying land use designation is Public / Semi-Public and the proposed underlying land use designation is Medium Density Residential SPIN Neighborhood #15. Chief Planner Killough presented this item in conjunction with items 6F, 6G, and 6H. Applicant Rick Simmons made a presentation and answered Council's questions. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, AMENDING THE 2005 CONSOLIDATED FUTURE LAND USE PLAN, AN ELEMENT OF THE SOUTHLAKE 2025 PLAN, THE CITY'S COMPREHENSIVE MASTER PLAN. Mayor Wambsganss opened the public hearing on item 6E. B.J. Couch, 2535 Union Church Road, Southlake, Texas, expressed his concerns about the drainage in this area. REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 5 of 13 Joseph and Kimiela Mortazavi, 2477 Union Church Road, Southlake, Texas, expressed concerns about the drainage, fencing, and overhead utilities. Engineer Joseph Reue with GSWW, Inc., answered questions regarding the drainage. Mayor Wambsganss closed the public hearing on Item 6E. No one spoke during the public hearing on item 6F. No one spoke during the public hearing on item 6G. Motion was made to approve Resolution No. 07-057, CP07-003, Comprehensive Land Use Plan Amendment for South Village at Watermere, being approximately 33.72 acres located at 2271 Union Church Road subject to the recommendations of the Planning and Zoning Commission and as presented. Motion: Terrell Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6F. Ordinance No 480-467a 2°d Reading (ZA07 097 Zoning Change and Concept Plan for South Village at Watermere on property being legally described as Tracts 4F 4171, 5A 1 B, 6A 1, and 6134 and a portion of Tracts 4D 4G and 6A J G Allen Survey Abstract No. 18 and being located at 2271 Union Church Road 2811 West Southlake Boulevard 2809 West Southlake Boulevard 2815 West Southlake Boulevard 2801 West Southlake Boulevard 2477 Union Church Road and 2451 Union Church Road. Current Zonin : AG Agricultural District. Requested Zoning: S-P-2 Generalized Site Plan District SPIN Neighborhood #15 Chief Planner Killough presented this item in conjunction with items 6E, 6G, and 6H. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE AMENDING ORDINANCE NO. 480, AS AMENDED, THE COMPREHENSIVE ZONING ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS; GRANTING A ZONING CHANGE ON A CERTAIN TRACT OR TRACTS OF LAND WITHIN THE CITY OF SOUTHLAKE, TEXAS BEING LEGALLY DESCRIBED AS TRACTS 4F, 4171, 5A1B, 6A1, & 6134 AND A PORTION OF TRACTS 4D, 4G, & 6A, J.G. ALLEN SURVEY, ABSTRACT NO. 18, BEING APPROXIMATELY 37.53 ACRES, AND MORE FULLY AND COMPLETELY DESCRIBED IN EXHIBIT "A" FROM "AG" AGRICULTURAL DISTRICT AND "S-P-2" GENERALIZED SITE PLAN DISTRICT TO "S- P-2" GENERALIZED SITE PLAN DISTRICT TO INCLUDE PERSONAL CARE FACILITY, NURSING CARE HOME, AND (SENIOR) MULTI-FAMILY RESIDENTIAL USES, AS DEPICTED ON THE APPROVED CONCEPT PLAN ATTACHED HERETO AND INCORPORATED HEREIN AS EXHIBIT "B", SUBJECT TO THE SPECIFIC REQUIREMENTS CONTAINED IN THIS ORDINANCE; CORRECTING THE OFFICIAL ZONING MAP; PRESERVING ALL OTHER PORTIONS OF THE ZONING ORDINANCE; REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 6 of 13 DETERMINING THAT THE PUBLIC INTEREST, MORALS AND GENERAL WELFARE DEMAND THE ZONING CHANGES AND AMENDMENTS HEREIN MADE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 480-467a, 2nd Reading (ZA07-097), Zoning Change and Concept Plan for South Village at Watermere, as presented by the applicant including but not limited to: the rendering of the cabana, the 6 foot wrought iron fence with landscaping on the east side, and the representations of the curved retaining wall and drainage area with fountains as presented; accepting the applicant's agreement to include language in the deed restrictions on those lots adjacent to the nursery that notifies future owners of the nursery use behind them; requiring a rendering of the wall in front of the parking at the tennis court; requiring a rendering of the gates; subject to the staff s presentation and the changes included; subject to Council's approval on first reading; subject to Concept Plan Review Summary No. 1, dated August 17, 2007; and subject to the recommendations of the Planning and Zoning Commission. Motion: Terrell Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6G. Ordinance No. 480-532 2"d Reading (ZA07-098 Zoning Change and Development Plan for South Village at Watermere on property being legally described as Tract 4C and 6A2 and a portion of Tracts 41) and 6A J G Allen Survey Abstract No 18 and being located at 2271 Union Church Road and 2451 Union Church Road Current Zoning: AG Agricultural District. Requested Zoning: R-PUD Residential Planned Unit Development District SPIN Neighborhood #15. Chief Planner Killough presented this item in conjunction with items 6E, 6F, and 6H. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE AMENDING ORDINANCE NO. 480, AS AMENDED, THE COMPREHENSIVE ZONING ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS; GRANTING A ZONING CHANGE ON A CERTAIN TRACT OR TRACTS OF LAND WITHIN THE CITY OF SOUTHLAKE, TEXAS, BEING LEGALLY DESCRIBED AS TRACTS 4C & 6A2 AND A PORTION OF TRACTS 4D & 6A, J.G. ALLEN SURVEY, ABSTRACT NO. 18, BEING APPROXIMATELY 30.1 ACRES, AND MORE FULLY AND COMPLETELY DESCRIBED IN EXHIBIT "A" FROM "AG" AGRICULTURAL DISTRICT AND "S-P-2" GENERALIZED SITE PLAN DISTRICT TO "R-PUD" RESIDENTIAL PLANNED UNIT DEVELOPMENT DISTRICT WITH "SF-20A" SINGLE FAMILY RESIDENTIAL DISTRICT USES, AS DEPICTED ON THE APPROVED DEVELOPMENT PLAN, INCLUDING "PUD" DEVELOPMENT STANDARDS, ATTACHED HERETO AND REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 7 of 13 INCORPORATED HEREIN AS EXHIBIT "B", SUBJECT TO THE SPECIFIC REQUIREMENTS CONTAINED IN THIS ORDINANCE; CORRECTING THE OFFICIAL ZONING MAP; PRESERVING ALL OTHER PORTIONS OF THE ZONING ORDINANCE; DETERMINING THAT THE PUBLIC INTEREST, MORALS AND GENERAL WELFARE DEMAND THE ZONING CHANGES AND AMENDMENTS HEREIN MADE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 480-532, 2nd Reading (ZA07-098), Zoning Change and Development Plan for South Village at Watermere subject to the applicant's presentation, approval of the specific variance requested, and subject to Revised Development Plan Review Summary No. 1, dated August 17, 2007. Motion: Terrell Second: Jones Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6H. ZA07-099, Preliminary Plat for South Village at Watermere on property being legally described as Tracts 4C, 4D, 6A2, and a portion of 6A, J.G. Allen Survey, Abstract No. 18 and being located at 2271 Union Church Road and 2451 Union Church Road. Current Zoning: AG Agricultural District. Proposed Zoning: S-P-2 Generalized Site Plan District. SPIN Neighborhood #15. Chief Planner Killough presented this item in conjunction with items 6E, 6F, and 6G. Motion was made to approve ZA07-099, Preliminary Plat for South Village at Watermere subject to Plat Review Summary No. 1, dated August 17, 2007, subject to approval of the requested variance regarding street frontage, and subject to the recommendations of the Planning and Zoning Commission. Motion: Terrell Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 61. Ordinance No. 480-533, 2nd Reading (ZA06-160), Zoning Change and Site Plan for Offices of K. Wayne Lee on property being legally described as Tracts 4A14 and 4A20, J.G. Allen Survey, Abstract No. 18 and being located at 3220 West Southlake Boulevard. Current Zoning: AG Agricultural District and R-PUD Residential Planned Unit Development District. Requested Zoning: S-P-1 Detailed Site Plan District. SPIN Neighborhood #15. Chief Planner Killough presented this item to Council. No separate presentation was made by the REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 8 of 13 applicant. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE AMENDING ORDINANCE NO. 480, AS AMENDED, THE COMPREHENSIVE ZONING ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS; GRANTING A ZONING CHANGE ON A CERTAIN TRACT OR TRACTS OF LAND WITHIN THE CITY OF SOUTHLAKE, TEXAS BEING LEGALLY DESCRIBED AS TRACTS 4A14 & 4A20, SITUATED IN THE J.G. ALLEN SURVEY, ABSTRACT NO. 18, BEING APPROXIMATELY 0.85 ACRES, AND MORE FULLY AND COMPLETELY DESCRIBED IN EXHIBIT "A" FROM "AG" AGRICULTURAL DISTRICT AND "R-PUD" RESIDENTIAL PLANNED UNIT DEVELOPMENT DISTRICT TO "S-P-I" DETAILED SITE PLAN DISTRICT WITH "O-1" OFFICE DISTRICT USES, AS DEPICTED ON THE APPROVED SITE PLAN ATTACHED HERETO AND INCORPORATED HEREIN AS EXHIBIT "B", SUBJECT TO THE SPECIFIC REQUIREMENTS CONTAINED IN THIS ORDINANCE; CORRECTING THE OFFICIAL ZONING MAP; PRESERVING ALL OTHER PORTIONS OF THE ZONING ORDINANCE; DETERMINING THAT THE PUBLIC INTEREST, MORALS AND GENERAL WELFARE DEMAND THE ZONING CHANGES AND AMENDMENTS HEREIN MADE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 480-533, 2nd Reading (ZA06-160), Zoning Change and Site Plan for Offices of K. Wayne Lee subject to City Council's approval on first reading, subject to the recommendations by the Planning and Zoning Commission, accepting applicant's willingness to grant access on the north and south sides of the building, and subject to Site Plan Review Summary No. 2, dated August 31, 2007. Motion: Terrell Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6J. Ordinance No. 480-187a 2°d Reading (ZA07-090)Zoning Change and Site Plan for Sports Complex on property being legally described as Lot 2R Block B Commerce Business Park Addition and being located at 280 Commerce Street Current Zoning: S-P-1 Detailed Site Plan District. Requested Zoning: S-P-1 Detailed Site Plan District SPIN Neighborhood #7. Chief Planner Killough presented this item to Council. Applicant Christi Abercrombie and architect Skip Blake made a presentation and answered Council's questions. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 9 of 13 AN ORDINANCE AMENDING ORDINANCE NO. 480, AS AMENDED, THE COMPREHENSIVE ZONING ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS; GRANTING A ZONING CHANGE ON A CERTAIN TRACT OR TRACTS OF LAND WITHIN THE CITY OF SOUTHLAKE, TEXAS, BEING LEGALLY DESCRIBED AS LOT 2R, BLOCK B, COMMERCE BUSINESS PARK, BEING APPROXIMATELY 4.15 ACRES, AND MORE FULLY AND COMPLETELY DESCRIBED IN EXHIBIT "A" FROM "S-P-1" DETAILED SITE PLAN DISTRICT WITH "I-1" LIGHT INDUSTRIAL DISTRICT USES AND TO INCLUDE THE RETAIL SALE OF FURNITURE TO "S-P-1" DETAILED SITE PLAN DISTRICT WITH "I-1" LIGHT INDUSTRIAL DISTRICT USES TO INCLUDE RETAIL FURNITURE SALES (AS CURRENTLY EXISTS) AND INDOOR ENTERTAINMENT USES, AS DEPICTED ON THE APPROVED SITE PLAN ATTACHED HERETO AND INCORPORATED HEREIN AS EXHIBIT "B", SUBJECT TO THE SPECIFIC REQUIREMENTS CONTAINED IN THIS ORDINANCE; CORRECTING THE OFFICIAL ZONING MAP; PRESERVING ALL OTHER PORTIONS OF THE ZONING ORDINANCE; DETERMINING THAT THE PUBLIC INTEREST, MORALS AND GENERAL WELFARE DEMAND THE ZONING CHANGES AND AMENDMENTS HEREIN MADE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. The Council discussed the list of requested uses with the applicant. Motion was made to approve Ordinance No. 480-187a, 2nd Reading (ZA07-090), Zoning Change and Site Plan for Sports Complex subject to the applicant's presentation specifically relating to the agreement to add landscaping as described; providing buffering and fencing along the north boundary of the property; approving the specific I-1 uses of. ice cream manufacturing, bakery, clothing manufacturing, candy facility, candle manufacturing, commercial school, and community facility uses; approving 154 parking spaces; and subject to Site Plan Review Summary No. 3, dated September 26, 2007. Motion: Jones Second: Terrell Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Mayor Wambsganss called for a break at 9:29 p.m. and reconvened the meeting at 9:46 p.m. Agenda Item No. 7A. Ordinance No. 480-QQQ 1" Reading Amending the Comprehensive Zoning Ordinance 480, as amended relating to accessory structure standards in residential zoning districts. Director Baker presented this item to Council. Mayor Wambsganss allowed the public to speak. REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 10 of 13 Robert Gray, 1275 Shady Oaks Drive, Southlake, Texas, made a short presentation to Council Tim Raley, 440 West Highland Street, Southlake, Texas, made a short presentation to Council. Steve Horn, 2050 Shady Oaks Drive, Southlake, Texas, spoke to Council regarding this issue. Lisa Stokdyk, 720 North Peytonville Avenue, Southlake, Texas, spoke to Council regarding this issue. Motion was made to approve Ordinance No. 480-QQQ, 1St Reading, Amending the Comprehensive Zoning Ordinance 480, as amended, relating to accessory structure standards in residential zoning districts noting a sliding scale of 3% will also apply to the one acre lots in SF- r districts up to a 4,000 S.F. cap; SF-2 districts will have 3% with no cap; and otherwise as presented. Motion: Terrell Second: Jones Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Mayor Pro Tem Morris indicated she would like staff to research ways to give residents an incentive to change their zoning to SF-2 if they qualify for that district. Agenda Item No 7B Ordinance No 480-492 0 Reading (ZA06-045) Zoning Change for a portion of Lot 1 Block 1 Arnold Estates The property is situated at 1275 Shady Oaks Drive with access through 520 West Highland Street. Current Zoning: RE Single Family Residential Estate District Requested Zoning: SF-IA Single Family Residential District. SPIN Neighborhood #11. Director Baker presented this item to Council. Applicant Robert Gray, 1275 Shady Oaks Drive, Southlake, Texas, made a presentation and answered Council's questions. After discussion, Mr. Gray asked to table this item to the first meeting in November. Motion was made to table Ordinance No. 480-492, 1 st Reading, (ZA06-045) Zoning Change for a portion of Lot 1, Block 1, Arnold Estates, to the November 6, 2007, City Council meeting. Motion: Jones Second: Terrell Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No 7C Ordinance No 480-534 1" Reading (ZA07-063) Zoning Change and Development Plan for Winfield Estates on property being legally described as Tracts 1, 1 C, 1 C 1, A H Chivers Survey Abstract No 299 and being located at 2210 North Carroll Avenue, 1155 East Dove Road and 1107 East Dove Road. Current Zoning: C-2 Local Retail Commercial District and AG Agricultural District Requested Zoning: R-PUD Residential Planned Unit REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 11 of 13 Development District. SPIN Neighborhood 45 Chief Planner Killough presented this item to Council. Applicant David Wilcox answered Council's questions. Council discussed this request. Motion was made to approve Ordinance No. 480-534, 1St Reading (ZA07-063), Zoning Change and Development Plan for Winfield Estates subject to Development Plan Review Summary No. 5, dated September 14, 2007; subject to the applicant's representations made this evening; noting there will be no front entry garages; subject to the applicant bringing a new tree survey on 2nd Reading which: a) clearly identifies the marginal and quality trees, b) quantifies the caliper inches to be saved, removed, and added to the site, and c) evaluates and quantifies the number of blue-dot trees which can be or have been changed to green dots and providing an explanation on why any cannot be saved; provide minimum 4-inch caliper canopy trees; provide better renderings of the entry, fencing and open space; provide a new, more-defined drainage plan; subject to the handouts provided this evening; make sewer available where possible upon completion; will change the plan to show the pond as a retention pond; provide a new Landscape Plan for City Council's review; and work with TXU to place utilities around the perimeter of the property underground. Motion: Terrell Second: Muzyka Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 8A. Resolution 07-054 Approving a new purchasing policy. Director Jackson presented this item to Council. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, APPROVING A NEW PURCHASING POLICY. Motion was made to approve Resolution 07-054, a new purchasing policy as presented. Motion: Jones Second: Morris Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 9A. Consider SP07-232 Variance to Sign Ordinance No 704-C for Petsmartlocated at 200 Village Center Drive Chief Planner Killough presented this item to Council. Applicant Brian Bush from Willow Creek Signs answered Council's questions. After discussion, Mr. Bush asked to table this item to the next meeting. Motion was made to table SP07-232, Variance to Sign Ordinance No. 704-C for Petsmart to the October 16, 2007, City Council meeting. Motion: Terrell Second: Jones Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 12 of 13 Nays: None Approved: 6-0 Agenda Item No. 9B. Consider SP07-317 Variance to Sign Ordinance No 704-C for Home Design Studio located at 2225 West Southlake Boulevard Suite 465 Chief Planner Killough presented this item to Council. Applicant Paul Esparza, 2005 Austin, Mansfield, Texas, answered Council's questions. Motion was made to approve SP07-317, Variance to Sign Ordinance No. 704-C for Home Design Studio located at 2225 West Southlake Boulevard, Suite 465, as presented. Motion: Jones Second: Muzyka Ayes: Hill, Jones, Morris, Muzyka, Terrell, Wambsganss Nays: Hill Approved: 5-1 Agenda Item No. 11. Adjournment Mayor Wambsganss adjourned the meeting at 12:17 a.m. *An audio recording of this meeting will be permanently retained in the City Secretary's Office. Andy Wambsganss ATTEST: = s Mayor P 4 00, Lori Payne City Secretary •®°e°°'°'° REGULAR CITY COUNCIL MEETING MINUTES, OCTOBER 2, 2007 Page 13 of 13 pecej vvJ a4- 4,~e_ to- > -01 Ct~y ~u•1u'~ ryree-~~ LV,V.=LVW 1/CnlJil! z~~-u RESIDENTUtL r2i ~ R ~ N00'31'06*W 672.64' 225.05' 125.00' 125.00' 125.16 4 N 35' SL 40° BL BLOCK 1 N V W p ~ N ~ N 4 ~/1 Y N 'O V W V A V O CO ~O O ;N 0 O 4 m N N pp L9 68 W O r A q . r„ 35' BL 86.56' 50.25' N 0 v 10429 CONC. StDEWAII( 125.24' v a o V 7A a 40.50R xiwmw STREET A ,OOL 358° .B A N A~ A ~ti 165.72' 69.49' y 56.16' ay 4' CONC. SIDEWALK t9 nwi 35' BL 169.55' N 35' BL 0 5' R..W. m B B . n s~2 e~ m W Q~ i. a ~ o mcnj a o n 169.55 40' BL 2 u o g W n w a~ 0 W P fA m N q~q ~ ~N ` 5 F w D, 100.25' 90.31' o e q °o 176 00' S q N rn z r Cn N No EVE; Zw WmD w N 169.55' ® M O W U ~/1 D h e A s B B D 15 8L R• .W' { OPEN SPACE. 1 10'7YPE-8 BVFFERI'ARD OPEN SPACE: 16 10' TYPE-8 BuFFERYARD 1 A U S 00'3136 E 518.21 N _ ri f`~ o .o ~ o ^v~ ~n N 61 N ~ u RJ '1' 00 oa C7. ti k. N W i EM a~ E=l a 0 C)4~o~-c~c~ r'ueefi CITY OF SOUTHLAKE, TEXAS COMBINATION TAX & REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 SUMMARY OF SALE OCTOBER 2, 2007 PRESENTED BY: First Southwest Company CITY OF SOUTHLAKE, TEXAS COMBINATION TAX & REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 TABLE OF CONTENTS TAB SELECTED PAGES FROM PRELIMINARY OFFICIAL STATEMENT 1 -Combination Tax & Revenue Certificates of Obligation, Series 2007 BOND RATING RESULTS AND REPORTS 2 Moody's Rating Agency - Underlying "Aa2" S&P Rating Agency - Underlying "AA" Fitch Rating Agency - Underlying "AA" BOND INSURANCE BIDS 3 CURRENT & HISTORICAL INTEREST RATES 4 FINAL FINANCIAL SCHEDULES 5 -Combination Tax & Revenue Certificates of Obligation, Series 2007 a w PRE11_ NI'11NARY OF IM1.. s'rA"I'I rm..N"r Dated: September 24, 2007 G Ratings: S&P: Fitch: " » Moody's: . _ w ^ - Insured -see "Bond W Insurance" and "Other Information - a " NEW ISSUE - Book-Entry-Only Ratings" herein) -o In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax - purposes under existing law, subject to the matters described under "TAX MATTERS - Tax Exemption" herein, including the alternative minimum tax on corporations. THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS m $6,715,000* CITY OF SOUTHLAKE, TEXAS (Tarrant and Denton Counties) TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 Dated Date: October 1, 2007 Due: February 15, as shown below .c PAYMENT TERMS... Interest on the $6,715,000 City of Southlake, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2007 (the "Certificates") will accrue from October 1, 2007 (the "Dated Date") L and will be payable until maturity or prior redemption on February 15 and August 15 of each year commencing February 15, = 2008, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of Z5 'E: $5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneficial owners thereof. - = Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., r x which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates (see "THE CERTIFICATES - Book-Entry-Only System" herein). The initial Paying Agent/Registrar is The Bank of New York Trust Company, N.A., Dallas, Texas (see "THE CERTIFICATES - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE The Certificates are issued pursuant to the Constitution and general laws of the State of Texas _ (the "State"), particularly Subchapter C of Chapter 271, Texas Local Government Code, amended, and constitute direct obligations of the City of Southlake, Texas (the "City"), payable from a combination of (i) the levy and collection of an annual ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a limited pledge (not to exceed $1,000) of the Net Revenues from the operation of the City's Waterworks and Sewer System, as provided in the ordinance authorizing the Certificates (the "Ordinance") (see "THE CERTIFICATES - Authority for Issuance of the G Certificates"). 7 = PURPOSE... Proceeds from the sale of the Certificates will be used for (i) the construction of public works, to wit: (a) constructing, acquiring, improving, and equipping municipal parking facilities, (b) constructing, improving and equipping park r improvements, including the acquisition of land, (c) improvements and extensions to the City's combined Waterworks and Sewer System and (ii) professional services rendered in relation to such projects and the financing thereof. r - CUSIP PREFIX: 844424 MATURITY SCHEDULE & 9 DIGIT CUSIP See Schedule on Page 2 LEGALITY The Certificates are offered for delivery when, as and if issued and received by the Underwriters and subject to w R the approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinion"). Certain legal matters will be passed upon for the Underwriters by - = West & Associates, L.L.P., Dallas, Texas, Counsel for the Underwriters. G _ DELIVERY... It is expected that the Certificates will be available for delivery through The Depository Trust Company on November 7, 2007. c A.G. EDWARDS & SONS MORGAN KEEGAN & CO., INC. *Preliminary, subject to change. MATURITY SCHEDULE* CUSIP Prefix: 844424 Price Price Principal 15-Feb Interest or CUSIP Principal 15-Feb Interest or CUSIP Amount Maturity Rate Yield Suffix(l) Amount Maturity Rate Yield Suffix $ 525,000 2008 $ 625,000 2014 510,000 2009 655,000 2015 530,000 2010 685,000 2016 550,000 2011 715,000 2017 575,000 2012 745,000 2018 600,000 2013 (Accrued Interest from October 1, 2007 to be added) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP services. OPTIONAL REDEMPTION... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE CERTIFICATES - Optional Redemption"). *Preliminary, subject to change 2 For purposes ofcompliance with Rule 15c2-12 of the Securities and Exchange Commission, this document constitutes an Official Statement with respect to the Certificates that has been "deemed final" by the City as of the date hereof except for the omission of no more Iran the information permitted by Rule 15c2-12. No dealer, broker, salesman or other person has been authorized by the Ciq, or the Underwriters to give any information, or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as )raving been authorized by the Ch), or the Underwriters. This Official Statement does not constitute an offer to sell Certificates in any jurisdiction to any person to whmn it is unlawful to make such offer in such jurisdiction. Certain information set forth herein has been obtained,fr-om the City and other sources which are believed to be reliable but is not guaranteed as to accuracy at- completeness, and is not to be construed as a representation by the Financial Advisor. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of'the City or other matters described herein since tine date hereof IN CONNECTION WITH THE OFFERING OF THE CERTIFICATES, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAYBE DISCONTINUED AT ANY TIME. THE CERTIFICATES ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE CERTIFICATES IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTION IN WHICH THESE CERTIFICATES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NONE OF THE CITY, THE UNDERWRITERS, NOR THE FINANCIAL ADVISOR MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY OR ITS BOOK-ENTRY-ONLY SYSTEM OR REGARDING OR ITS FINANCIAL GUARANTY INSURANCE POLICIES. THE UNDERWRITERS HAVE PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFICIAL STATEMENT. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH AND AS PART OF THEIR RESPECTIVE RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LA HIS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION BUT THE UNDER147RITERS DO NOT GUARANTEE THE ACCURACY OF COMPLETENESS OF SUCH INFORMATION. TABLE OF CONTENTS OFFICIAL STATEMENT SUMMARY ......................................4 TAX MATTERS 28 CITY OFFICIALS, STAFF AND CONSULTANTS .................7 CONTINUING DISCLOSURE OF INFORMATION 30 ELECTED OFFICIALS ..............................................................7 SELECTED ADMINISTRATIVE STAFF ......................................7 OTHER INFORMATION ..........................................................31 CONSULTANTS AND ADVISORS .............................................7 RATINGS 31 LITIGATION 31 INTRODUCTION ..........................................................................8 REGISTRATION AND QUALIFICATION OF CERTIFICATES FOR SALE 31 THE CERTIFICATES ..................................................................8 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC BOND INSURANCE ....................................................................12 FUNDS IN TEXAS....................................................... 31 LEGAL MATTERS 32 TAX INFORMATION .................................................................14 FINANCIAL ADVISOR........................................................... 32 TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL UNDERWRITING FOR TILE CERTIFICATES 32 OBLIGATION DEBT 17 FORWARD-LOOKING STATEMETNS DISCLAIMER................ 33 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY MISCELLANEOUS 33 CATEGORY 18 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT APPENDICES HISTORY ....................................................................19 GENERAL INFORMATION REGARDING THE CITY A TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY. 19 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT.. B TABLE 5 - TEN LARGEST TAXPAYERS 19 TABLE 6 - TAX ADEQUACY(" 20 FORM OF BOND COUNSELS OPINION C TABLE 7 - ESTIMATED OVERLAPPING DEBT ......................20 DEBT INFORMATION ..............................................................21 The cover page hereof, this page, the appendices included TABLE 8 - PRo-FORMA GENERAL OBLIGATION DEBT herein and any addenda, supplement or amendment hereto, SERVICE REQUIREMENTS ..........................................21 are part of the Official Statement. TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION ..............................................................22 TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT... 22 TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS .................................................22 TABLE 12 - OTI IER OBLIGATIONS .........................................23 FINANCIAL INFORMATION ..................................................24 TABLE 13 - GENERAL FUND REVENUES AND EXPENDITURE HISTORY 25 TABLE 14 - MUNICIPAL SALES TAX HISTORY ...................26 TABLE 15 - CURRENT INVESTMENTS ...................................28 3 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Certificates to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE CITY The City of Southlake, Texas (the "City") is a political subdivision and municipal corporation of the State of Texas (the "State"), located in Tarrant County, Texas. The City covers approximately 23 square miles (see "INTRODUCTION - Description of City"). THE CERTIFICATES The Certificates are issued as $6,715,000* Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2007 (the "Certificates"). The Certificates are issued as serial certificates maturing February 15, 2008 through February 15, 2018, inclusive (see "THE CERTIFICATES - Description of the Certificates"). PAYMENT OF INTEREST Interest on the Certificates accrues from October 1, 2007, and is payable February 15, 2008, and each August 15 and February 15 thereafter until maturity or prior redemption (see "THE CERTIFICATES - Description of the Certificates" and "THE CERTIFICATES - Optional Redemption"). AUTHORITY FOR ISSUANCE.......... The Certificates are issued pursuant to the Constitution and general laws of the State, including particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and an Ordinance passed by the City Council (see "THE CERTIFICATES - Authority for Issuance of the Certificates"). SECURITY FOR THE CERTIFICATES The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection of an annual ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a limited pledge (not to exceed $1,000) of the Net Revenues from the operation of the City's Waterworks and Sewer System, as provided in the Ordinance authorizing the Certificates (the "Ordinance") (see "THE CERTIFICATES - Security and Source of Payment of the Certificates"). REDEMPTION The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE CERTIFICATES - Optional Redemption"). TAxExEMPTION In the opinion of Bond Counsel, the interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption "TAX MATTERS" herein, including the alternative minimum tax on corporations. USE OF PROCEEDS FOR THE CERTIFICATES Proceeds from the sale of the Certificates will be used for (i) the construction of public works, to wit: (a) constructing, acquiring, improving, and equipping municipal parking facilities, (b) constructing, improving and equipping park improvements, including the acquisition of land, (c) improvements and extensions to the City's combined Waterworks and Sewer System and (ii) professional services rendered in relation to such projects and the financing thereof. *Preliminary, subject to change 4 RATINGS The Certificates are rated by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), by Fitch Ratings ("Fitch") and by Moody's Investors Service, Inc. ("Moody's") with the understanding that, upon delivery of the Certificates, a financial guaranty insurance policy will be issued by . The underlying rating for the outstanding tax supported debt of the City is rated "AA" by S&P, "AA-" by Fitch and "Aa2" by Moody's. The City also has several issues outstanding which are rated "AAA" by S&P, "AAA" by Fitch and "Aaa" by Moody's through insurance provided by various commercial insurance companies (see "OTHER INFORMATION - Ratings"). BOOK-ENTRY-ONLY SYSTEM The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates (see "THE CERTIFICATES - Book-Entry-Only System"). PAYMENT RECORD The City has never defaulted in payment of its general obligation tax debt. SELECTED FINANCIAL INFORMATION G. 0. Ratio of Fiscal Taxable Tax Debt G.O. Tax Debt G.O. Tax Year Taxable Assessed Outstanding to Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9/30 Population(i) Valuation''-) Per Capita of Year (8) Valuation Capita 2003 23,972 $ 3,288,588,331 (3) $ 137,185 $ 131,311,522 3.99% 5,478 2004 24,150 3,537,817,808 (4) 146,493 142,192,273 4.02% 5,888 2005 24,900 3,620,071,201 c5) 145,384 133,388,445 3.68% 5,357 2006 25,280 3,847,640,322 (e) 152,201 133,236,808 3.46% 5,270 2007 25,700 4,129,037,018 (7) 160,663 133,665,519 3.24% 5,201 (1) Source: City staff. (2) As reported by the Tarrant Appraisal District on the City's annual State Property Tax Board Reports; subject to change during the ensuing year. (3) Includes taxable incremental value of approximately $77,179,336 that is not available for the City's general use. (4) Includes taxable incremental value of approximately $84,605,370 that is not available for the City's general use. (5) Includes taxable incremental value of approximately $88,835,639 that is not available for the City's general use. (6) Includes taxable incremental value of approximately $132,277,420 that is not available for the City's general use. (7) Includes taxable incremental value of approximately $183,318,278 that is not available for the City's general use. (8) Includes self-supporting debt and the Certificates. 5 GENERAL FUND CONSOLIDATED STATEMENT SUMMARY Fiscal Year Ended September 30, 2006 2005 2004 2003 2002 Beginning Balance $ 12,025,373 "U $ 10,857,447 $ 8,964,002 $ 3,904,849 $ 2,141,691 Total Revenue 28,472,280 24,699,780 23,167,747 21,473,635 20,545,188 Total Expenditures 22,647,855 21,801,430 20,680,076 19,355,267 17,961,867 Net Transfers (742,000) (1,059,399) (594,226) (664,989) (820,163) Net Funds Available 5,082,425 1,838,951 1,893,445 1,453,379 1,763,158 Equity Transfer/Prior Period Adjustment - - - 3,605,774 - Ending Balance $ 17,107,798 $ 12,696,398 $ 10,857,447 $ 8,964,002 $ 3,904,849 (1) Unaudited. For additional information regarding the City, please contact: Sharen Jackson, CPA James S. Sabonis Director of Finance Maria Urbina City of Southlake or First Southwest Company Administrative Offices 325 North Saint Paul, Suite 800 1400 Main Street, Suite 440 Dallas, Texas 75201 Southlake, Texas 76092 (214) 953-4195 (817) 481-1713 6 CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS Length of Term City Council Service Expires Occupation Andy Wambsganss 4 Years May-09 Attorney Mayor John Terrell 3 Years May-10 Executive Councilmember Gregory Jones 3 Years May-10 Attorney Councilmember Vernon Stansell I Year May-09 Executive Councilmember Virginia Muzyka 3 Years May-10 Community Volunteer Deputy Mayor Pro Tern Carloyn Morris 5 Years May-08 Educator Mayor Pro Tern Laura K. Hill 6 Years May-08 Business Owner Councilmember SELECTED ADMINISTRATIVE STAFF Length of Name Position Service Shana Yelverton City Manager 14 Years Sharen Jackson Director of Finance 8 Years Robert H. Price Director of Public Works 2 Years CONSULTANTS AND ADVISORS Auditors Weaver and Tidwell, L.L.P. Dallas, Texas Bond Counsel .........................................................................................................................................Fulbright & Jaworski L.L.P. Dallas, Texas Financial Advisor First Southwest Company Dallas, Texas 7 OFFICIAL STATEMENT RELATING TO $6,715,000* CITY OF SOUTHLAKE, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $6,715,000* City of Southlake, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2007 (the "Certificates"). Capitalized terms used in this Official Statement have the same meanings assigned to such terns in the ordinance (the "Ordinance") adopted by the City Council (as hereinafter defined) on the date of sale of the Certificates which authorized the issuance of the Certificates, except as otherwise indicated. There follows in this Official Statement descriptions of the Certificates and certain information regarding the City of Southlake, Texas (the "City") and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Dallas, Texas. DESCRIPTION OF THE CITY... The City is a political subdivision and municipal corporation of the State of Texas (the "State"), duly organized and existing under the laws of the State, including the City's Home Rule Charter. The City first adopted its Home Rule Charter in 1987. The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and six Councilmembers who are elected for staggered three-year terns. The City Council formulates operating policy for the City while the City Manager is the chief administration officer. Some of the services that the City provides are: public safety (police and fire protection), highways and streets, water and sanitary sewer utilities, culture-recreation, public improvements, planning and zoning, and general administrative services. The 2000 Census population for the City was 21,497, while the estimated 2007 population is 25,700. The City covers approximately 23 square miles. THE CERTIFICATES DESCRIPTION OF THE CERTIFICATES... The Certificates are dated October 1, 2007, and mature on February 15 in each of the years and in the amounts shown on page 2 hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable until maturity or prior redemption on February 15 and August 15 of each year, commencing February 15, 2008. The definitive Certificates will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates (see "THE CERTIFICATES - Book-Entry-Only System"). AUTHORITY FOR ISSUANCE OF THE CERTIFICATES The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Subchapter C of Chapter 271, Texas Local Government, as amended, and the Ordinance to be adopted by the City Council on the date of the sale of the Certificates. SECURITY AND SOURCE OF PAYMENT OF THE CERTIFICATES... The Certificates are payable from the proceeds of an annual ad valorem tax levied, within the limits prescribed by law, on all taxable property within the City and from a limited pledge of the Net Revenues (as defined in the Ordinance) of the City's combined Waterworks and Sewer System (the "System"), such pledge being limited to an amount not in excess of $1,000 and, together with a parity pledge securing the payment of the "Previously Issued Certificates" (identified and defined in the Ordinance), being junior and subordinate to the lien on and pledge of such Net Revenues securing the payment of "Prior Lien Obligations" (identified and defined in the Ordinance) now outstanding and hereinafter issued by the City. In the Ordinance, the City reserves and retains the right to issue Prior Lien Obligations without limitation as to principal amount but subject to any applicable terms, conditions or restrictions under law or otherwise as well as the right to issue additional obligations payable from the same sources as are the Certificates and, together with the Certificates, equally and ratably secured by a parity lien on the pledge of the surplus Net Revenues of the System. 8 TAX RATE LIMITATION... All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and provides for a maximum ad valorem tax rate of $2.50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. Administratively, the Attorney General of the State of Texas will permit allocation of the $1.50 of the $2.50 maximum tax rate for all general obligation debt service, as calculated at the time of issuance. OPTIONAL REDEMPTION... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Certificates are to be redeemed, the City may select the maturities of Certificates to be redeemed. If less than all the Certificates of any maturity are to be redeemed, the Paying Agent/Registrar (or DTC while the Certificates are in Book-Entry-Only form) shall determine by lot the Certificates, or portions thereof, within such maturity to be redeemed. If a Certificate (or any portion of the principal sum thereof) has been called for redemption and notice of such redemption has been given, such Certificate (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. NOTICE OF REDEMPTION... Not less than 30 days prior to a redemption date for the Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Certificates to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE CERTIFICATES CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH CERTIFICATE OR PORTION THEREOF SHALL CEASE TO ACCRUE. DEFEASANCE The Ordinance provides for the defeasance of the Certificates when the payment of the principal of and premium, if any, on the Certificates, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise), is provided by irrevocably depositing with a paying agent or other authorized escrow agent, in trust (1) money sufficient to make such payment or (2) Government Obligations, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amounts and at such times to insure the availability, without reinvestment, of sufficient money, together with monies deposited therewith, if any, to make such payment. The Ordinance provides that "Government Obligations" means (a) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (c) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. Upon making such deposit in the manner described, such defeased obligations shall no longer be deemed outstanding obligations secured by the ordinance authorizing their issuance, but will be payable only from the funds and Government Obligations deposited into escrow and will not be considered debt of the City for purposes of taxation or applying any limitation on the City's ability to issue debt for any other purpose. Boots-ENTRY-ONLY SYSTEM This section describes how ownership of the Certificates are to be transferred and how the principal of, premium, if any, and interest on the Certificates are to be paid to and credited by The Depository Trust Company ("DTC"), New York, New York, while the Certificates are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The City believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurance that (I) DTC will distribute payments of debt service on the Certificates, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Certificates), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. 9 DTC will act as securities depository for the Certificates. The Certificates will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Certificate will be issued for each maturity of the Certificates in the aggregate amount of such maturity. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtc.org. Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC's records. The ownership interest of each actual purchaser of each Certificate (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Certificates is discontinued. To facilitate subsequent transfers, all Certificates deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Certificates with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as redemptions, tenders, defaults, and proposed amendments to the Certificate documents. For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Certificates unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or the Paying Agent/Registrar, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC [nor its nominee], the Paying Agent/Registrar, 10 or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of City or Paying Agent / Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Certificates at any time by giving reasonable notice to the City or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, Certificates are required to be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement In reading this Official Statement it should be understood that while the Certificates are in the Book-Entry Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Certificates, but (i) all rights of ownership must be exercised through DTC and the Book-Entry Only System, and (ii) except as described above, notices that are to be given to registered owners under the Ordinance will be given only to DTC. Information concerning DTC and the Book-Entry Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Paying Agent/Registrar, the City or the Underwriter. Effect of Termination of Book-Entry Only System In the event that the Book-Entry Only System is discontinued by DTC or the use of the Book-Entry Only System is discontinued by the City, printed Certificates will be issued to the holders and the Certificates will be subject to transfer, exchange and registration provisions as set forth in the Ordinance and summarized under "THE CERTIFICATES - Transfer, Exchange and Registration" below. PAYING AGENT/REGISTRAR... The initial Paying Agent/Registrar is The Bank of New York Trust Company, N.A., Dallas, Texas. In the Ordinance, the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Certificates are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Certificates. Upon any change in the Paying Agent/Registrar for the Certificates, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Certificates by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Interest on the Certificates shall be paid to the registered owners appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date (defined below), and such interest shall be paid (i) by check sent United States Mail, first class postage prepaid to the address of the registered owner recorded in the registration books of the Paying Agent/Registrar or (ii) by such other method, acceptable to the Paying Agent/Registrar requested by, and at the risk and expense of, the registered owner. Principal of the Certificates will be paid to the registered owners at their stated maturity or prior redemption upon presentation to designated payment/transfer office by the Paying Agent/Registrar. If a date for the payment of principal and/or interest on the Certificates shall be a Saturday, Sunday, a legal holiday or a day when banking institutions in the city where the designated payment/transfer office of the Paying Agent/Registrar is located are authorized to close, then the date for such payment shall be the next succeeding day which is not such a day, and payment on such date shall have the same force and effect as if made on the date payment was due. TRANSFER, EXCHANGE AND REGISTRATION... In the event the Book-Entry-Only System should be discontinued, printed certificates will be issued to the registered owners of the Certificates and thereafter the Certificates may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed certificates to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Certificates may be assigned by the execution of an assignment form on the Certificates or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Certificates will be delivered by the Paying Agent/Registrar, in lieu of the Certificates being transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Certificates issued in an exchange or transfer of Certificates will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Certificates to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New Certificates registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Certificates surrendered for exchange or transfer. See "THE CERTIFICATES - Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Certificates. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within 45 days of the date I1 fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Certificate. RECORD DATE FOR INTEREST PAYMENT... The record date ("Record Date") for the interest payable on the Certificates on any interest payment date means the close of business on the last business day of the preceding month. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Certificate appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. AMENDMENTS The City may amend the Ordinance without the consent of or notice to any registered owner in any manner not detrimental to the interest of the registered owners, including the curing of any ambiguity inconsistency, or formal defect or omission therein. In addition, the City may, with the written consent of the holders of a majority in aggregate principal amount of the Certificates then outstanding and affected thereby, amend, add to, or rescind any of the provisions of the Ordinance; except that, without consent of the registered owners of all of the Certificates affected, no such amendment, addition or rescission may (1) make any change in the maturity of any of the outstanding Certificates; (2) reduce the rate of interest home by any of the outstanding Certificates; (3) reduce the amount of the principal or maturity value of, or redemption premium, if any, payable on any outstanding Certificates; (4) modify the terms of payment or of interest or redemption premium on outstanding Certificates or any of them or impose any condition with respect to such payment; or (5) change the minimum percentage amount of the Certificates necessary to be held by registered owners for consent to such amendment. CERTIFICATEHOLDERS' REMEDIES The Ordinance does not establish specific events of default with respect to the Certificates. Under State law there is no right to the acceleration of maturity of the Certificates upon the failure of the City to observe any covenant under the Ordinance. Although a registered owner of Certificates could presumably obtain a judgment against the City if a default occurred in the payment of principal of or interest on any such Certificates, such judgment could not be satisfied by execution against any property of the City. Such registered owner's only practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel the City to levy, assess and collect an annual ad valorem tax sufficient to pay principal of and interest on the Certificates as they become due. The enforcement of any such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis. The Ordinance does not provide for the appointment of a trustee to represent the interests of the certificateholders upon any failure of the City to perform in accordance with the terms of the Ordinance, or upon any other condition and, accordingly, all legal actions to enforce such remedies would have to be undertaken at the initiative of, and financed by, the registered owners. On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W. 3d 325 (Tex. 2006), that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in "clear and unambiguous" language. Because it is unclear whether the Texas legislature has effectively waived the City's sovereign immunity from a suit for money damages, holders of the Certificates may not be able to bring such a suit against the City for breach of the Certificates or Ordinance covenants. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of and interest on the Certificates. Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ("Chapter 9"). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or holders of the Certificates of an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Ordinance and Certificates are qualified with respect to the customary rights of debtors relative to their creditors. 12 SOURCES AND Uses OF PROCEEDS The proceeds from the sale of the Certificates will be applied approximately as follows: SOURCES OF FUNDS: Par Amount of Certificates Reoffering Premium Accrued Interest Total Sources $ - USES OF FUNDS: Deposit to Project Construction Fund Costs of Issuance Total Underwriter's Discount Original Issue Discount Deposit to Debt Service Fund Gross Bond Insurance Premium Total Uses $ - *Preliminary, subject to change. BOND INSURANCE Application for municipal bond insurance has been made by the City. Upon the determination of which entity will provide such insurance, information relating to the issuer of the municipal bond insurance policy applicable to the Certificates will be set forth in the final Official Statement. TAX INFORMATION AD VALOREM TAx LAW... The appraisal of property within the City is the responsibility of the Tarrant Appraisal District (the "Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal District is required under Title I of the Texas Tax Code (the "Property Tax Code") to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property, different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further limits the appraised value of a residence homestead for a tax year to an amount not to exceed the lesser of (1) the market value of the property, or (2) the sum of (a) 10% of the appraised value of the property for the last year in which the property was appraised for taxation times the number of years since the property was last appraised, plus (b) the appraised value of the property for the last year in which the property was appraised plus (c) the market value of all new improvements to the property. The value placed upon property within the Appraisal District is subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Directors of the Appraisal District. The Appraisal District is required to review the value of property within the Appraisal District at least every three years. The City may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the Property Tax Code for identification of property subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ("Article VIII") and State law provide for certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation. Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) An exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political subdivision; (2) An exemption of up to 20% of the market value of residence homesteads. The minimum exemption under this provision is $5,000. In the case of residence homestead exemptions granted under Section l-b, Article VIII, ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. 13 CITY OF SOUTHLAKE, TEXAS COMBINATION TAX &REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 UNDERLYING MUNICIPAL BOND RATING AGENCY RATING "Aa2" MOODY'S RATING AGENCY S&P RATING AGENCY ccAA" cc~f~ FITCH RATING AGENCY DEFINITIONS OF LONG-TERM RATINGS: "AA?'- Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree. "A" - Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. "l, 2, or 3" - For Moody's, the ratings "Aa" to "Baa" may be modified by the addition of a number to show relative standing within the major rating categories. 1 is the strongest. M "Plus or Minus - For S&P and Fitch, the ratings from "AA" to "CCU may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. MOODY'S ASSIGNS Aa2 RATING TO THE CITY OF SOUTHLAKE'S (TX) $6.7 MIL... Page 1 of 3 Global Credit Research New Issue 0IaaWs ,hisstom Send" 1 OCT 2007 Save as PDF New Issue: Southlake (City of) TX MOODY'S ASSIGNS Aa2 RATING TO THE CITY OF SOUTHLAKE'S (TX) $6.7 MILLION CERTIFICATES OF OBLIGATION, SERIES 2007 RATING AFFIRMATION AFFECTS $138 MILLION IN OUTSTANDING PARITY DEBT, INCLUDING THE CURRENT ISSUE Southlake (City of) TX Water and Sewer Ent. Municipality TX Moody's Rating ISSUE RATING Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Aa2 Series 2007 Sale Amount $6,715,000 Expected Sale Date 10/01/07 Rating Description General Obligation Limited Tax Opinion NEW YORK, Oct 1, 2007 Moody's Investors Service has assigned a Aa2 rating to the City of Southlake's (TX) issuance of $6,715,000 Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2007. Concurrently, Moody's has affirmed the Aa2 rating on the city's approximately $131.2 million in outstanding general obligation secured debt. Factors contributing to the rating assignment include the city's very favorable socioeconomic profile, continuously expanding tax base, and strong financial operations. Also considered was the city's higher but manageable debt position that improves when various revenue sources are considered as supporting retirement of property-tax secured debt. Proceeds from the sale of the certificates will be used for the parks, public works, and other city projects. Annual principal and interest payments are secured by the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the city. ROBUST TAX BASE EXPANSION CONTINUES The City of Southlake is located in Tarrant County (general obligation rating Aaa) approximately 5 miles northwest of DFW airport and directly south of Grapevine Lake. The city's tax base grew at an annual rate of over 15% throughout the 1990s and early 2000 as a result of vigorous high-end residential construction. The resulting high socioeconomic profile of the city is reflected in the median family income of 272% of the Census 2000 national value and 297% of the State's. For the past five years, the tax base has continued to grow at a more moderate but still robust average annual growth rate of 8.7%. Currently, less than 20% of the land is undeveloped, while only about 13% of the acreage zoned for residential construction remains undeveloped. As of January 2007, about 665 residential lots were available for construction. The City has experienced a decline in the number of residential building permits from a high of 242 in fiscal 2005 to 159 in fiscal 2006. However, officials indicated that between January and August 2007, 138 residential building permits have been issued, which compares favorably when compared to 130 during the same period last year. Much of the remaining developable property is zoned for commercial office and retail. The completion of roadway infrastructure within and through the city continues to make available property appealing. As a result, there are several large-scale office space, retail, and commercial developments planned for the near future. Moody's believes that ongoing and planned development will continue to add value to the tax roll. Additionally, Moody's notes that officials continue to display conservatism in the assumed 4% growth rates utilized for budgeting and capital planning purposes. SURPLUSES CONTINUE TO INCREASE RESERVES httn://www.moodys.com/moodys/cust/research/MDCdocs/01 /2007000000443737.asp?doc... 10/1/2007 MOODY'S ASSIGNS Aa2 RATING TO THE CITY OF SOUTHLAKE'S (TX) $6.7 MIL... Page 2 of 3 The city's financial position continues to be favorable. The city has posted nine consecutive general fund operating surpluses, which have bolstered the city's total general fund balance to a robust $17.1 million (60% of general fund revenues) and an undesignated balance of $10.7 million (37.6% of revenues). The city council has adopted a policy of maintaining a general fund balance of at least 15% and an optimum of 25% of operating expenditures. The city has decided to begin utilizing the general fund balances in excess of 25% of operating expenditures for capital needs in the future. In fiscal 2007, the city has began a technology upgrade initiative, which officials estimate will decrease the total general fund balance to about $15 million, while the undesignated portion will decrease to about $7.8 million. The difference between the total and the undesignated general fund balance will be utilized in fiscal 2008 for capital improvements and for further technology upgrades. Moody's believes the city's conservative financial planning and commitment to maintaining sizable general fund reserves is a positive indication of credit quality consistent with a Aa2 rating level. In fiscal 2006, operating revenues were primarily derived from property taxes (51 and sales taxes (23.6%). However, the city has two additional sales tax levies, of 1/2% each, utilized to support public safety and park activities. Total sales tax collections have annually increased 10.9% on average over the past five years as retail offerings have increased significantly as a result of the Town Square and other similar developments, which are supported by the high socioeconomic conditions of its residents. DEBT BURDEN REMAINS HIGH BUT MANAGEABLE DUE TO MULTIPLE PAYMENT SOURCES After this issue, the city's direct and overall debt ratios remain high at 3.4% and 6.2% respectively, both expressed as a percent of assessed valuation. However, when considering the debt that has historically been supported by revenues from the water and sewer system and the Southlake Parks Development Corporation, the direct and overall debt ratios are reduced to more manageable levels of 1.9% and 4.7%, respectively. The city has $9.88 million remaining in authorized general obligation debt from a May 1999 authorization. The city does not plan to issue this debt in the next three years. However, the city's capital improvement program includes the issuance of approximately $6 million in 2008 and $3 million annually thereafter, plus $3 million annually in certificates of obligation to be self- supported by the water and sewer system. The city also plans to issue about $6 million of sales tax revenue debt in 2009. Principal payout is above average with a solid 66.5% of principal retired in ten years. With a moderate tax base growth anticipated over the medium term and an above average debt retirement schedule, Moody's believes the city's debt position will remain manageable as additional debt is layered. KEY STATISTICS: 2007 Estimated Population: 25,750 FY 2008 Full Valuation: $4.86 billion FY 2008 Full Valuation per Capita: $189,262 Direct Debt Ratio: 3.4%; excluding self-supporting debt: 1.9% Principal Payout in 10 years: 66.5% FY 2006 General Fund Balance: $17.1 million (60% of general fund revenues) Post-sale Outstanding Parity Debt: $140 million Sales Tax Debt Outstanding: $23.8 million Analysts Mireya Loewe Analyst Public Finance Group Moody's Investors Service Douglas Benton Backup Analyst http://www.moodys.com/moodys/cust/research/MDCdocs/01/2007000000443737.asp?doc... 10/1/2007 MOODY'S ASSIGNS Aa2 RATING TO THE CITY OF SOUTHLAKE'S (TX) $6.7 MIL... Page 3 of 3 Public Finance Group Moody's Investors Service Contacts Journalists: (212) 553-0376 Research Clients: (212) 553-1653 © Copyright 2007, Moody's Investors Service, Inc. and/or its licensors including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved. 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MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by It fees ranging from $1,500 to approximately $2,400,000. Moody's Corporation (MCO) and Its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy." http://www.moodys.com/moodys/cust/research/MDCdocs/01 /200700000044373 7. asp?doe... 10/1/2007 [27-Sep-2007] Summary: Southlake, Texas; General Obligation Pagel of 3 rhe McGraw-Hill Co STANDARD RatingsDirectr-' MOWS RESEARCH Summary: Southlake, Texas; General Obligation Publication date: 27-Sep-2007 Primary Credit Analyst: Sarah Smaardyk, Dallas (1) 214-871-1428; sarah-smaardyk@standardandpoors.com Secondary Credit Analyst: James Breeding, Dallas (1) 214-871-1407; james_breeding@standardandpoors.com Credit Profile US$6.715 mil tax & wtrwks & swr sys (Itd pledge) rev certs of oblig ser 2007 dtd 10/01/2007 due 02/15/2018 Long Term Rating AA/Stable New Southlake GO (FGIC) Unenhanced Rating AA(SPUR)/Stable Affirmed _......d Southlake GO (FGIC) Unenhanced Rating AA(SPUR)/Stable Affirmed Rationale Standard & Poor's Ratings Services assigned its 'AA' standard long-term rating, and stable outlook, to Southlake, Texas' series 2007 tax and waterworks and sewer system revenue certificates of obligation and affirmed its 'AA' Standard & Poor's underlying rating (SPUR), with a stable outlook, on the city's parity GO debt. Additional rating factors include the city's: • Strong and diversified economic base, coupled with access to the Dallas-Fort Worth MSA; • High income and wealth indicators; and • Historically sound financial position with conservative management practices and long-term planning. Mitigating credit factors include the city's: • High debt burden due to ongoing growth pressures of overlapping entities, and • High carrying charges. The city's full faith and credit pledge secures its GO bonds. The city's limited-tax pledge and pledge of surplus net revenues of its waterworks and sewer system secure the certificates. Officials will use certificate proceeds to finance the construction and improvement of municipal parking and park facilities and the waterworks and sewer system. Southlake, with a population of 25,700, is in Tarrant County, six miles west of Dallas-Fort Worth International Airport. Southlake has exhibited rapid growth over the past decade due to its favorable location in the Dallas-Fort Worth MSA, coupled with its access to Dallas-Fort Worth International Airport. City residents have access to, and participate in, the diverse Dallas-Fort Worth MSA employment market. Growth projections indicate the city will achieve buildout with a population of about 30,000, which city officials estimate will occur by 2020. Wealth and income levels have continued to rise over the past few years. Market value is high at more than $175,000 per capita, which is evident in the average home price of more than $437,176. Income levels are very high: Median household effective buying income is 302% of the state's average and 298% of the nation's average. Population growth has triggered retail and commercial construction along several thoroughfares, which t,tt„-,•//www ratinvq(iirect.com/Anns/RD/controller/Article?id=604614&tvoe=&outputTyp... 10/1/2007 [27-Sep-2007] Summary: Southlake, Texas; General Obligation Page 2 of 3 has contributed to 9% assessed valuation (AV) growth since fiscal 2007 to $4.5 billion in fiscal 2008. Southlake's financial performance has been consistently strong. Despite growth pressures and a high debt service carrying charge, management has achieved operating surpluses in each of the past five fiscal years. Beginning in fiscal 2006, the city council established a strategic initiative fund to finance onetime expenditures or capital projects. Officials began transferring general fund reserves in excess of 25% of operating expenses into the strategic initiative fund in fiscal 2006. Management transferred $6.7 million into the strategic initiative fund in fiscal 2006 from the general fund. After this transfer, the city closed fiscal 2006 with a $4.4 million operating surplus that increased the unreserved general fund balance to $16.9 million, or a strong 72% of expenditures, which was well In excess of the 25% minimum target. Officials are projecting to end fiscal 2007 with an $8 million unreserved general fund balance, which will still be within the city's general fund balance policy. The unreserved general fund balance drawdown is due to a planned transfer into the strategic initiative fund. Southlake's combined property tax rate, at 46 cents per $100 of AV, has remained stable over the past six years. Property (49%) and sales (36%) taxes are the city's major revenue sources. Officials do not plan to adjust the tax rate in fiscal 2008 because of this issuance. They, however, will be conducting a water and sewer rate study in fiscal 2008 to determine whether they should adjust rates. Although the city adopted a balanced budget, officials are projecting fund balance to increase due to higher-than-forecast revenues. Standard & Poor's deems Southlake's management practices "good" under its Financial Management Assessment (FMA) methodology, indicating financial management practices exist in most areas, though not all might be formalized or regularly monitored by governance officials. Growth pressures are evident in overall net debt ratios of $10,723 per capita and 5.9% of true value despite the self- support of a significant portion of the city's debt. Carroll Independent School District accounts for about 66% of the city's overall net debt. Carrying charges were a high 22% of fiscal 2006 annual operating expenditures. Amortization Is above average with roughly 60% of principal being retired over 10 years. Management intends to issue additional debt in spring 2008. Outlook The stable outlook reflects the expectation that the city's strong demographics, including high wealth Indicators, will remain unchanged and that the city's overall debt burden will moderate as it approaches buildout. In addition, we expect Southlake will sustain its healthy financial position within management's stated policy while appropriating surplus general fund balances to fund onetime capital needs. The city's overall debt burden constrains the rating. Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Ratings Detail (As Of 27-Sep-2007) Southlake tax rev cert of oblig ser 2000 dtd 03/01/2000 due 02/15/2019-2020 2025 2030 Unenhanced Rating AA(SPUR)/Stable Affirmed Southlake tax & wtrwks & swr sys (Itd pledge) rev certs of oblig ser 2007 dtd 10/01/2007 due 02/15/2018 Long Term Rating AA/Stable New Rating Southlake GO (AMBAC) Unenhanced Rating AA(SPUR)/Stable Affirmed Southlake GO (FSA) Unenhanced Rating AA(SPUR)/Stable Affirmed Many issues are enhanced by bond insurance. Analytic services provided by Standard & Poor's Ratings Services (Ratings Services) are the result of separate activities designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. Accordingly, any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision. Ratings are based on information received by Ratings Services. Other divisions of Standard & Poor's may have information that is not available to Ratings Services. Standard & Poor's has established policies and procedures to maintain the confidentiality of non-public information received during the ratings process. Ratings Services receives compensation for its ratings. Such compensation is normally paid either by the issuers of such securities or third parties participating in marketing the securities. While Standard & Poor's reserves the right to disseminate the rating, it receives no httns://www.ratinizsdirect.com/Avps/RD/controller/Article?id=604614&type=&outputTyp... 10/1/2007 [27-Sep-2007] Summary: Southlake, Texas; General Obligation Page 3 of 3 payment for doing so, except for subscriptions to its publications. Additional information about our ratings fees is available at www.standardandpoors.coin/usratingsfees. Privacy Notice Copyright © 2007 Standard & Poor's, a division of The McGraw-Hill Companies. All Rights Reserved, httt)s://www.ratingsdirect. com/Apps/RD/controller/Article?id=604614&type=&outputTyp... 10/1/2007 FitchRatings Public Finance KNOW YOUR RISK Tax Supported Southlake, Texas New Issue Ratings ■ Outlook New Issue The upgrade to `AA' rating reflects Southlake's continued expansion of its Tax and Waterworks and Sewer already large financial reserves, ongoing tax base growth and System (Limited Pledge) Revenue diversification, strong local wealth indicators, and modest future debt Certificates of Obligation, plans. Also incorporated in the rating is the city's high debt burden, Series 2007 AA accumulated during its recent high-growth period. The city's tax base has Outstanding Debt benefited from considerable high-end residential development, and General Obligation Bonds AA management is now focused on diversifying its tax base with commercial, (Upgraded from `AA-' on 9/25/07) industrial, and mixed-use development. Additionally, the income and Certificates of Obligation AA employment characteristics of Southlake are positive. Despite the (Upgraded from `AA-' on 9/25/07) operating and capital pressures associated with growth, the city has Southlake Parks Development Corporation Sales Tax prudently managed its finances, provided the necessary infrastructure and Revenue Bonds AA- services, and created alternate funding sources for capital improvements. (Upgraded from `A+' on 9/25/07) Southlake Parks Development ■ Rating Considerations Corporation Subordinate Sales Southlake, with an estimated 2007 population of 25,700, is located in Tax Revenue Bonds A+ northeast Tarrant County approximately 15 miles northwest of Dallas (Upgraded from `A' on 9/25/07) and 10 miles northeast of Fort Worth. The city is also five miles Rating Outlook Stable northwest of the Dallas-Fort Worth International Airport and 10 miles Analysts from Alliance Airport. The city's boundaries encompass 23 square Josh Acosta miles, making it the fourth largest city in the county. Due to the housing +1 512 215-3726 boom of the late 1990s and early years of this decade, Southlake's jose.acosta@fitchratings.com residentially zoned land is 85% developed, and a total build-out population of about 30,000 is projected by 2020. Accordingly, the city's +1 512la 21 Q 5--3731 3731 taxable assessed valuation (TAV) growth has slowed from previous +1 51 years' levels of 20% or more to still solid rates of growth. Current gabriela.quiroga@fitchratings.com residential permit activity has remained modest but steady, centered on Issuer Contact smaller high-end developments, helping increase the average new home Sharen Jackson CPA construction value to a reported $438,000 in 2006. The recently Director of Finance improved State Highway 114 has evolved into a major growth corridor +1 817 481-1713 attracting large retail and commercial construction. sjackson@ci.southiake.tx.us New Issue Details The city's financial position historically has been strong, with $6,715,000 Tax and Waterworks and Sewer undesignated general fund reserves of 331/,54% of expenditures since System (Limited Pledge) Revenue Certificates fiscal 2001. Conservative budgeting has enabled the city to of Obligation (COs), Series 2007, are scheduled consistently exceed its fund balance policy of 150/6-25%. Starting with to sell Oct. 1 via negotiation through a syndicate the fiscal 2006 budget, reserves in excess of 25% of expenditures are led by A.G. Edwards & Sons. transferred to a new strategic initiative fund (SIF), which funds one- Security: The COs are payable from the proceeds time capital outlays. Fiscal 2006 maintained a large 47% undesignated of an annual ad valorem tax levied on all taxable fund balance in addition to $6 million in the SIF. Unaudited fiscal property within the city, limited to $2.50 per $100 2007 results point to another operating surplus, all of which will be taxable assessed valuation (TAV) and a limited transferred to the SIF. The fiscal 2008 budget is balanced with a level pledge (up to $1,000) of the surplus net revenues nominal property tax rate and a conservative 5% sales tax growth of the city's waterworks and sewer system. Purpose: Proceeds will be used for municipal projection and includes an additional $2 million transfer to the SIF. parking facilities and improvements to the city 's General fund revenues are diverse, led by property taxes, with parks and waterworks and sewer system. manageable sales tax revenue exposure. Numerous dedicated funding September 25, 2007 www.fitchratings.com FitchRatings Public Finance KNOW YOUR RISK Debt Statistics Property Value and Sales Tax Trends This Issue - Certificates of Obligation (COs) 6,715 ($000, Fiscal Years Ending Sept. 30) Outstanding Debt Taxable General Obligation Bonds 74,145 COs 47,610 Fiscal Assessed Change Sales Change TRA Contract Revenue Bonds 4,130 Year Valuation Taxes SPDC Sales Tax Revenue Bonds - Prior Lien 2,065 1999 2,046,085 - 3,068 - SPDC Sales Tax Revenue Bonds - 2000 2,207,043 7.9 3,684 20.1 Subordinate Lien* 4,430 2001 2,588,102 17.3 4,619 25.4 SPDC Sales Tax Revenue Bonds - Third Lien 17,365 2002 3,034,015 17.2 4,904 6.2 Lease Obligations 599 2003 3,288,588 8.4 5,192 5.9 Less: Self-Supporting Debt: 2004 3,537,818 7.6 5,404 4.1 Waterworks and Sewer System 43,189 2005 3,620,071 2.3 6,280 16.2 Trinity River Contract Revenue Bonds 4,130 2006 3,847,640 6.3 7,742 23.3 Direct Debt 109,740 2007 4,129,037 7.3 8,284* 7.0 Overlapping Debt* 128,949 2008 4,592,696 11.2 8,698** 5.0 Net Debt 238,689 *Unaudited. **Budgeted. Debt Ratios Direct Debt Per Capita 4,270 presence, along with a large movie theater and a As % of TAV 2.4 248-room Hilton Hotel with ample convention center Overall Debt Per Capita 9,288 meeting space. Another phase also under way will add 115 As % of TAV 5.2 high-end residential units. With a current incremental value Taxable Assessed Valuation ($000; fiscal 2008) 4,592,696 of $271 million, the TIRZ is able to fully support the debt Population (2007 estimate) 25,700 service on the current offering and its outstanding bonds. *Overlapping debt adjusted to reflect state support of local school district debt. SPDC - Southlake Parks Development Corporation. Including sales tax debt, the city's direct debt levels are Note: Numbers may not add due to rounding. well above average at $4,270 per capita and 2.4% of TAV. The city's overall debt burden is high at $9,288 sources have mitigated operating and capital pressure on per capita and 5.2% of TAV. The city's 2008-2012 the general and debt service funds; voters approved capital improvement plan (CIP) totals over $125 million separate sales taxes for parks and crime control as well and is sized to preclude any tax rate increases under as a tax increment reinvestment zone (TIRZ) for a new conservative TAV growth assumptions. With scheduled town hall and infrastructure needs within the city's annual issuances of about $3 million through 2012, mixed-use town center. overall debt levels as a percentage of TAV should fall below 5%, assuming modest rates of tax base growth. Almost 20% of the city's $121.7 million outstanding tax-supported bonds have a subordinate lien on the ■ Strengths tax increment of the city's TIRZ, established in 1997. . Sound financial operations and reserves. The fourth phase of the town center, completed in • Conservative management and financial policies. April 2006, further added to the TIRES large retail General Fund Financial Summary ($000, Audited Fiscal Years Ended Aug. 31) 2002 2003 2004 2005 2006 Revenues 20,545 21,474 23,168 24,700 28,472 Expenditures 17,962 19,355 20,680 21,801 22,648 Net Change 2,583 2,119 2,488 2,899 5,824 Other Sources 0 214 263 69 50 Transfers Out (820) (879) (857) (1,129) (792) Net Income 1,763 1,454 1,894 1,839 5,082 Total Fund Balance 7,540 8,964 10,857 12,696 17,108 As % of Expenditures and Transfers Out 40.1 44.3 50.4 55.4 75.5 Unreserved Fund Balance 7,394 8,808 10,720 12,521 16,888 As % of Expenditures and Transfers Out 39.4 43.5 49.8 54.6 74.6 Undesignated Fund Balance 7,296 8,690 10,609 12,397 10,739 As % of Expenditures and Transfers Out 38.8 42.9 49.3 54.1 47.4 Note: Numbers may not add due to rounding. Southlake, Texas 2 FitchRatings Public Finance KNOW YOUR RISK • Expanding and diversifying tax base, with ■ Risks favorable location on a growth corridor. • High debt levels, mitigated somewhat by • Establishment of supplemental infrastructure substantial support from non-property tax sources funding sources. High levels of personal income and projected to decline as the city approaches full and wealthy residential tax base. build-out and future debt needs diminish. • Reliance on economically sensitive retail sector. Copyright C 2007 by Fitch, Inc., Fitch Ratings Ltd. and its subsidiaries. One State Street Plaza, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. All of the information contained herein is based on information obtained from issuers, other obligors, underwriters, and other sources which Fitch believes to be reliable. 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Southlake, Texas 3 CITY OF SOUTHLAKE, TEXAS COMBINATION TAX & REVENUE CERTIFICATES OF OBLIGATION, SERIES 2007 SUMMARY OF BOND INSURANCE BIDS BONDS BOND INSURANCE PREMIUM "AAA" INSURANCE COMPANIES OF TOTAL PRINCIPAL & INTEREST CIFG Insurance Corporation 9.5 Basis Points XL Capital Assurance 16.0 Basis Points FSA 16.5 Basis Points AMBAC Assurance Corporation 18.2 Basis Points (0 O N O f- O N Lf) • v0co O C 1-i 0 V N N N M 1~ ~ ~ rl~ • co CO (O (0 0 00 O IT It O V) (D 0N0) O O 0 Lf O O N (6(6(6(6 000000 0 CO I- In (O(OIli a7 0000- 00 co 00 O M M M I-T 0 0 0 0 • U) U) E N 00 E 3 N 00N-O 'a NLO N0 CO N It m M L Ce00 ~ • r r r V ER 7 N O O O O O O O O W 0 Cl 0 0 L6 L L L m CD m co Y ~ 0 f0 (O CO R CO CD (o (O t 0 co a ~ C w Cl. .0 .0 Q .0 .0 ~i In N O LA 0 co CO O r r ~ fn-0JU . LL E X U Q r ' c O CL E DO1 O N N VI T I 'o ~ E r 02 o ° N I v E E co II E a a o a+ m J c i d' !I 0IO ' II co ~ j O Y I 1 a= I I m I fill C « E E o m T L T O 7 x~a V Oh m y I ~ N « L I ° c g I! ' Q I ~ z m H ICI II ii OO~ ~ o a~ U a O w T v m Y 7 E CL II, i E C ' I 7 C " U - I ~ O V / ''I O = 00 N L ~ d j I I ~ K.0- _ M o d w ~ L • T N O N E' d N L c m 3 Q Y d o I av ~ m L N ti~ Q N J co cOc d - m N I G c CF) Q rn m V o m m m O O~ U ° m a c C N ~O ED O a Q I V c L0 O Q c Q L J N ~ I LL. U 3 I a 3 2 ~ o _m I L c Ill O C N N I O L U O d N J L I a III - o W ` co 3 n ~ I ' II prj ~~p~ a m N ~ V U ~ ~ O N - N ~ N L L - I J= ai } R `D a I'D I N N O y- ~ N ~ L ~ N J d N C ~ N U = U O y ~ m L C 9 (0 C N t0 I I I U U N a L - c I N N N ~ OI N d y E ` N O N C O O O r a O O LO O 1[) O N O 00 00 1~ P ~D CO to 1n M 07 1 FIRST SOUTHWEST COMPANY "Bond Buyer's" Index of 20 Municipal Bonds Basis Valuation of Par Bonds The most important guide as to what the Municipal Bond Market has done in one time period versus another is the "Bond Buyer's" 20 Bond Index. Published on Thursday of each week, it is the accepted guide of the Municipal Bond Industry to determine trends and movements of interest rates in the market. To compute the index each week a poll is taken of several large investment banking houses on the 20 year price (expressed in terms of an interest rate) of the outstanding bonds of certain municipalities. Week 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 January 1 5.37 5.70 5.07 5.05 6.04 5.09 5.26 4.84 4.64 4.47 4.35 4.15 2 5.50 5.71 4.96 5.02 6.11 5.00 5.16 4.94 4.52 4.41 4.37 4.21 3 5.40 5.72 5.03 5.01 6.09 5.10 5.08 4.95 4.57 4.40 4.33 4.25 4 5.46 5.72 5.11 4.96 6.08 5.20 5.17 4.89 4.71 4.37 4.42 4.32 5 5.73 5.15 4.90 February 1 5.40 5.70 5.11 5.02 6.05 5.15 5.13 4.88 4.68 4.37 4.43 4.31 2 5.37 5.62 5.08 5.00 6.02 5.15 5.13 4.83 4.52 4.27 4.42 4.21 3 5.33 5.56 5.07 5.01 5.98 5.20 5.10 4.79 4.50 4.35 4.41 4.17 4 5.48 5.65 5.14 5.08 5.94 5.21 5.07 4.74 4.49 4.42 4.36 4.19 5 5.57 March 1 5.59 5.70 5.25 5.14 5.94 5.18 5.19 4.69 4.54 4.50 4.39 4.10 2 5.81 5.75 5.20 5.11 5.89 5.16 5.30 4.67 4.35 4.57 4.45 4.08 3 5.86 5.78 5.19 5.07 5.84 5.11 5.34 4.83 4.35 4.56 4.40 4.13 4 5.90 5.81 5.20 5.08 5.76 5.07 5.32 4.84 4.41 4.63 4.43 4.20 5 5.11 5.74 5.14 4.61 4.53 4.25 April 1 5.86 5.88 5.19 5.07 5.69 5.18 5.28 4.79 4.59 4.56 4.56 4.26 2 6.03 5.88 5.18 5.06 5.72 5.24 5.20 4.76 4.76 4.49 4.57 4.29 3 5.94 5.87 5.21 5.07 5.76 5.33 5.22 4.74 4.89 4.42 4.59 4.24 4 5.91 5.87 5.25 5.07 5.82 5.34 5.16 4.66 4.89 4.37 4.59 4.26 5 5.32 4.95 May 1 6.06 5.77 5.26 5.15 5.93 5.32 5.17 4.58 5.01 4.38 4.63 4.25 2 6.08 5.71 5.23 5.14 6.02 5.25 5.19 4.50 5.14 4.35 4.63 4.24 3 5.96 5.67 5.16 5.21 6.05 5.31 5.24 4.35 5.13 4.25 4.58 4.29 4 5.87 5.66 5.13 5.23 6.01 5.30 5.19 4.30 5.01 4.24 4.52 4.38 5 5.94 5.67 5.28 5.14 4.31 4.41 June 1 5.94 5.60 5.13 5.29 5.92 5.21 5.14 4.27 5.03 4.18 4.57 4.54 2 6.12 5.52 5.08 5.34 5.83 5.19 5.09 4.21 5.10 4.21 4.48 4.64 3 6.06 5.48 5.11 5.38 5.77 5.20 5.04 4.35 5.05 4.31 4.58 4.63 4 5.97 5.53 5.14 5.45 5.73 5.21 5.07 4.47 5.01 4.23 4.68 4.60 5 5.75 4.24 4.71 July 1 5.94 5.53 5.15 5.42 5.71 5.26 5.10 4.51 4.98 4.27 4.69 4.61 2 6.00 5.38 5.12 5.41 5.61 5.22 5.04 4.56 4.81 4.30 4.62 4.60 3 5.88 5.32 5.17 5.36 5.60 5.17 5.00 4.71 4.85 4.36 4.59 4.55 4 5.86 5.28 5.16 5.35 5.58 5.14 4.94 4.83 4.84 4.31 4.55 4.47 5 5.23 5.16 5.41 4.88 August 1 5.79 5.33 5.16 5.49 5.55 5.10 5.00 5.07 4.78 4.38 4.49 4.51 2 5.67 5.55 5.11 5.57 5.51 5.08 4.99 5.06 4.70 4.37 4.45 4.59 3 5.74 5.43 5.09 5.65 5.51 5.02 4.89 5.18 4.67 4.27 4.39 4.74 4 5.75 5.45 5.03 5.61 5.49 4.99 4.97 5.10 4.66 4.25 4.34 4.81 5 5.86 5.49 4.96 4.91 5.07 4.30 4.70 September 1 5.95 5.42 5.03 5.67 5.49 5.02 4.78 5.07 4.63 4.18 4.34 4.57 2 5.89 5.44 5.00 5.66 5.51 n.a. 4.77 4.94 4.61 4.26 4.30 4.46 3 5.88 5.33 4.97 5.69 5.59 5.12 4.69 4.84 4.54 4.30 4.21 4.51 4 5.76 5.36 4.94 5.71 5.63 5.14 4.68 4.81 4.46 4.30 4.23 4.48 5 5.73 4.39 October 1 5.70 5.34 4.82 5.80 5.64 5.03 4.68 4.75 4.54 4.44 4.25 2 5.73 5.38 4.88 5.89 5.62 5.05 4.66 4.92 4.61 4.51 4.33 3 5.72 5.42 4.96 5.98 5.56 5.05 4.98 5.00 4.48 4.47 4.33 4 5.75 5.42 4.99 5.99 5.53 5.05 5.12 4.88 4.43 4.56 4.30 5 5.70 5.35 5.00 4.95 4.88 4.44 1 5.67 5.38 5.04 5.88 5.54 4.96 4.91 4.83 4.45 4.63 4.18 November 2 5.60 5.34 5.04 5.83 5.60 4.91 4.90 4.77 4.58 4.61 4.19 3 5.55 5.31 5.03 5.84 5.57 5.02 5.00 4.66 4.52 4.52 4.17 4 5.54 5.29 5.01 5.87 5.55 5.14 5.00 4.66 4.53 4.51 4.14 5 5.46 5.15 4.04 December 1 5.57 5.25 4.96 5.91 5.36 5.21 4.94 4.73 4.63 4.53 4.03 2 5.66 5.21 4.94 5.89 5.25 5.26 4.83 4.70 4.43 4.49 4.12 3 5.67 5.17 4.96 5.96 5.16 5.26 4.82 4.57 4.39 4.48 4.12 4 5.66 5.14 5.03 6.00 5.14 5.26 4.79 4.58 4.44 4.42 4.17 5 5.15 5.00 6.00 4.60 4.49 4.38 $6,540,000 City of Southlake, Texas Certificates of Obligation, Series 2007 FINAL 10-1-07 Table of Contents Report Net Debt Service Schedule 1 Sources & Uses ........................_2.. Debt Service Schedule 3 4 Pricing Summary 2007 CO 10-1-07 FINAL First Southwest Company • Department Final $6,540,000 City of Southlake, Texas Certificates of Obligation, Series 2007 FINAL 10-1-07 Net Debt Service Schedule Date Principal Coupon Interest Total P+I Net New D/S 09/30/2008 510,000.00 4.000% 229,791.94 739,791.94 739,791.94 09/30/2009 500,000.00 4.000% 244,750.00 744,750.00 744,750.00 09/30/2010 520,000.00 4.000% 224,350.00 744,350.00 744,350.00 09/30/2011 540,000.00 4.000% 203,150.00 743,150.00 743,150.00 09/30/2012 560,000.00 4.000% ........................................._........_18.1,150.00...................................................._741,150.00..................................................._741,150.00... 09/30/2013 585,000.00 4.000% 158,250.00 743,250.00 743,250.00 09/30/2014 610,000.00 4.000% 134,350.00 744,350.00 744,350.00 09/30/2015 630,000.00 4.000% 109,550.00 739,550.00 739,550.00 09/30/2016 660,000.00 5.000% 80,450.00 740,450.00 740,450.00 09/30/2017 695,000.00 5.000% 46,575.00 741,575.00 741,575.00 09/30/2018 730,000.00 4.000% 14,600.00 744,600.00 744,600.00 Total $6,540,000.00 - $1,626,966.94 $8,166,966.94 $8,166,966.94 2007 CO 10-1-07 FINAL First Southwest Company Department Public Finance Final $6,540,000 City of Southlake, Texas Certificates of Obligation, Series 2007 FINAL 10-1-07 Sources & Uses Dated 1010112007 1 Delivered 1110712007 Sources Of Funds Par Amount of Bonds $6,540,000.00 Reoffering Premium 156 402.80 Accrued Interest from 10/01/2007 to 11/07/2007 27,515.00 Total Sources $6,723,917.80 . . Uses Of Funds Original Issue Discount (OID) 6,110.10 Total Underwriter's Discount (0.704%) 46,020.48 Costs of Issuance 110,000.00 Gross Bond Insurance Premium ( P 16.5 bp) 13,475.50 Deposit to Debt Service Fund 27,515.0 Deposit to Project Construction Fund 6 520 000.00. Rounding Amount 796.72 Total Uses $6,723,917.80 2007 CO 10-1-07 FINAL First Southwest Company Department Public Finance Final $6,540,000 City of Southlake, Texas Certificates of Obligation, Series 2007 FINAL 10-1-07 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 11/07/2007 - - - - 02/15/2008 510,000.00 4.000% 102,416.94 612,416.94 08/15/2008 - - 127,375.00 127,375.00 - 09/30/2008 - - - - 739,791.94 02/15/2009 500,000.00 4.000% 127,375.00 627,375 00 . 08/15/2009 117,375.00 117,375.00 - 09/30/2009 - - - - 744,750.00 02/15/2010 520,000.00 4.000% 117,375.00 637,375.00 - 08/15/2010 - - 106,975.00 106,975.00 - 09/30/2010 - - 744e350.00 - .._...._........_...o............._.............................. 02/15/2011 540,000.00 4.000% 106,975.00 646,975.00 08/15/2011 - 96,175.00 96,175.00 09/30/2011 - - - - 743,150.00 02/15/2012 560,000.00 4.000% 96,175.00 656,175.00 - 08/15/2012 - - 84>975.00 84,975.00 09/30/2012 - - - 741,150.00 02/15/2013 585,000.00 4.000% 84,975.00 669,975.00 - 08/15/2013 - - 73,275.00 73,275.00 - 09/30/2013 - - - 743,250.00 02/15/2014 610,000.00 4.000% 73,275.00 683,275.00 - 08/15/2014 61,075.00 61,075.00 09/30/2014 - - - - 744,350.00 02/15/2015 630,000.00 4.000% 61,075.00 691,075.00 - 08/15/2015 - - 48,475.00 48,475.00 - 09/30/15._. 739r.550.00 .....................2__0.1........__................___......................_..........._.._._............._..___...__....._._......................_.Q................_.__........................................_.............._...._..........._....._.........._._.........._....._......._...._._....._.........._..__....................._................._......_........._. 02/15/2016 660,000.00 5.000% 48,475.00 708,475.00 08/15/2016 - - 31,975.00 31,975.00 - 09/30/2016 - - - - 740,450.00 02/15/2017 695,000.00 5.000% 31,975.00 726,975.00 - 08/15/2017 - - 14,600.00 14,600.00 _ 741,575.0 09/30/2017 02/15/2018 730,000.00 4.000% 14,600.00 744,600.00 - 09/30/2018 - - - - 744,600.00 Total $6,540,000.00 $1,626,966.94 $8,166,966.94 - Yield Statistics Accrued Interest from 10/01/2007 to 11/07/2007 27,515.00 Bond Year Dollars _37 6 Average Life 5.75 ears Average Coupon 4.3196488% Net Interest Cost (NIC) 4.0428028% _ True Interest Cost (TIC) 3.9890905% Bond Yield for Arbitrage Purposes 3.8847762% . All Inclusive Cost (AIC) 4.3735449% 11 IRS Form 8038 Net Interest Cost 3.7365409%" Wei hted Avera a Maturity 5.797 Years 2007 CO 10-1-07 FINAL First Southwest Company Public Finance Department Final $6,540,000 City of Southlake, Texas Certificates of Obligation, Series 2007 FINAL 10-1-07 Pricing Summary Type of Maturity Maturity Bond Coupon Yield Value Price Dollar Price 02/15/2008 Serial Coupon 4.000% 3.470% 510,000.00 100.134% 510,683.40 02/15/2009 Serial Coupon 4.000% 3.500% 500,000.00 100.612% 503,060.00 02/15/2010 Serial Coupon 4.000% 3.540% 520,000.00 100.991% 525,153.20 02/15/2011 Serial Coupon 4.000% 3.570% 540,000.00 101.312% 547,084.80 02/15/2012 Serial Coupon 4.000% 3.610% 560,000.00 101.526% 568 545.60 02/15/2013 Serial Coupon 4.000% ° 3.660% 585,000.00 101.612% 594,430.20 02/15/2014 Serial Coupon 4.000% 3.730% 610,000.00 101.493% 619,107.30 02/15/2015 Serial Coupon 4.000% 3.810% 630,000.00 101.192% 637,509.60 02/15/2016 Serial Coupon 5.000% 3.890% 660,000.00 107.781% 711,354.60 02/15/2017 Serial Coupon 5.000% 3.980% 695 000.00 107.838% 749,474.10 _ -..................z...... 02/15/2018 Serial Coupon 4.000% 4.100% 730,000.00 99.163% 723,889.90 Total - - - $6,540,000.00 - $6,690,292.70 Bid Information Par Amount of Bonds $6,540,000.00 Reoffering Premium or (Discount) 150±.292.70 . Gross Production $6,690,292.70 Total Underwriter's Discount (0.704%) $(46,020.48) Bid (101.594%) 6,644,272.22 Accrued Interest from 10/01/2007 to 11/07/2007 27,515.00 _ Total Purchase Price $6,671,787:22 Bond Year Dollars $37,664.33 Average Life 5.759 Years Average Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Interest Cost (NIC) 4.0428028% True Interest Cost (TIC) 3.9890905% 2007 CO 10-1-07 FINAL First Southwest Company Public Department